Flipkart ready to step into online grocery again; Staples & dry products the starting point

In celebration of its 10 successful years in ecommerce, Flipkart has decided to explore the online grocery scene once again. The etailer’s CEO confirmed that the platform will delve into online grocery soon. Following in rival Amazon’s and DMart’s footsteps, the online marketplace has decided that it is finally ready to test the waters of online grocery through the FMCG and consumables category.

Why is this category on Flipkart’s mind?

FMCG and consumables as a group ranks third on Amazon India. For Flipkart, the largest online retailer in the country, mobile devices, apparel and large appliances have been driving sales. By launching staples and FMCG plus promoting this group of products, the etailer intends to turn its mobile and high-value product buying shoppers into regular customers on its platform.

Its FMCG and consumable’s category will be launched in July, revealed a source aware of this plan.

How will the new category be promoted?

Flipkart will keep prices attractive to match DMart’s strategy. The platform will also offer incentives to frequent shoppers through programmes similar to the ones offered via Amazon Pantry. Cashbacks will also be provided like Amazon does through Amazon Pay.

With regards to this project, Flipkart’ Vice President, Adarsh Menon said, “Staples will be a different brand to be rolled out in July-end or August. The promise of staples is around freshness and good healthy food and that is how the brand identity will be set up.”

This will be the second time Flipkart tires out the on-demand grocery and consumables delivery space. A pilot of the service will be introduced in Bangalore. The main focus will lie on selling staples and dry products. This is mainly because the company is yet to put the final touches to its plans to supply and deliver fresh and perishable goods, said sources within the company.

Mirroring Amazon Pantry

Amazon Pantry ships staples, FMCG and personal care products. These are delivered in 15 Kg boxes at Rs.20. On the first and second of every month, shoppers using this service receive attractive deals as a part of the Super Value Days. This, in turn, has increased the number of repeat customers on the platform.

Flipkart wants to create something similar through its own FMCG and consumables category. Its venture will start off with branded products at discounted prices and some private labels as well. It will concentrate on selling directly to consumers where Flipkart delivery meets expectations, said experts following this space.

Sreedhar Prasad, partner ecommerce and startup at KPMG India, said, “Flipkart has focused on acquiring customers in the B2C space all these years and it is unlikely they will sell to hotels, restaurants, caterers (HoReCa) and kirana network to begin with. The way for the grocery sector to grow is through the hyperlocal-blended model, where people receive the supply directly from Flipkart in regions where they have a warehouse or from suppliers to the marketplace in absence of a hub nearby.”

Besides Amazon, Flipkart will also have to look at BigBasket’s strategies and performance in online grocery to make sure it makes few mistakes and relies on strategies that work in this field of online retail.

Shopclues wants ‘Destination for Fashion’ title; Scouts partnership to achieve same

Fashion is the ‘it’ word in online retail these days. This ecommerce category is certainly not at its saturation point as reports predict that fashion will dominate the ecommerce industry by 2020.  Etailers Flipkart and Amazon are pro fashion and are counting on private labels in these segments to boost their ecommerce sales. Flipkart owns two of the largest fashion etailers in India – Myntra and Jabong, while Amazon has its very own Amazon Fashion and a fashion A-team to compete with Flipkart.

Online retailer Shopclues is somewhere on the same wavelength. The etailer is also counting on fashion to earn profits. But its approach is a bit different. The online marketplace will be concentrating on affordable fashion to make its money.

Looking for a fashion partner

Last month, Shopclues was all about non-branded fashion. It launched a marketing campaign focused on the same and expects high earnings from this maneuver. The ecommerce company is now looking for a fashion partner to make its platform an everyday destination for fashion, mentioned a top company official.

The company co-founder and CEO, Sanjay Sethi said, “We are looking at building our fashion category through acquisition as we are looking to position Shopclues as the everyday fashion destination. We are scouting for acquisitions in areas like analytics, mobility and applications also mainly to strengthen payment operations.”

Fashion category growth

The chief of business at Shopclues, Radhika Agarwal said, “Growth has been attained, even while improving the bottom-line, in an industry where the common practice is to erode profitability to drive GMV growth.”

The lifestyle category at Shopclues contributes to around 50% of its total orders. The category comprises of sub-categories like men’s and women’s clothing, accessories and footwear. From FY 2015-16 to FY 2016-17, the company claims its fashion GMV has doubled. The company has more than 2 lakh merchants under its fashion category alone and has a wide variety of almost 4 million products. These products are an assortment of craft-based, local and branded items.

Agarwal added, “We are focused on value and mid-price segments which today comprises 75% of the online fashion market. Today’s fashion consumer is seeking a variety that helps them be trendy every day.”

Around 80% of the fashion and lifestyle sellers on the platform are SMEs while the rest sell regional or mid-tier and normal brands. The etailer formed a partnership with the Ministry of Textile as well to promote cotton fabric. Approximately 70% of the fashion items purchased from the platform are cotton products.

Snapdeal has 3-months to respond to ‘stealing marketing concept’ allegations: Court

As per news reports released in April 2017, Snapdeal co-founders Kunal Bahl and Rohit Bansal along with CFO Vijay Ajmera were summoned by the court on 17th May for stealing marketing concept. This was done based on Gaurav Dua’s allegations that the trio stole his business concept, which he had shared with Ajmera.

Following the complaints, Delhi court has asked Snapdeal co-founders and CFO to respond by 31st August, 2017.

Dua’s side of story:

• Dua launched an ecommerce company Indianretail.net in 2005, which was an upgraded version of his previous venture Marketsindelhi.com started in 1999
• Indianretail’s business model was that it allowed offline brands/businesses to sell online
• Dua applied for the patent in 2007, got the certificate in 2008
• Dua and Snapdeal’s CFO Ajmera used to work together at NDTV Convergence. Dua left NDTV in 2010 and joined Snapdeal
• In 2010, Ajmera helped Dua to create fundraising business proposal for Indianretail and arranged a meeting with an investor in January 2011
• Ajmera extracted information regarding Indianretail from Dua between  2010 and 2011, including trade secrets
• In September 2011, Snapdeal transitioned from a deals website to an online marketplace model

“Snapdeal.com was operating as a daily deals site, an absolutely different business model. However, Ajmera, Bahl and Bansal used the opportunity to launch a new business based on my plans, which they had fraudulently taken from me,” claimed Dua.

What happened after Snapdeal became a marketplace?

According to Dua, Snapdeal offered him three things when he confronted them. They were:

• Assistance in raising funds for his business
• Compensation for stealing his idea
• Job at Snapdeal with stock options

This went on from 2011 to 2014. When none of the three happened, Dua approached the police in December 2014.

“We went to police in December 2014 but they did not do anything. Then, we went to court and it asked the police to submit a report…Then the trial happened. Four months down the line, the court also took cognisance of cheating under Section 417,” said Dua.

However, court rejected Dua’s plea against Snapdeal in December 2016. He filed a new petition again in March 2017, which was not only accepted but Snapdeal was also issued summons by the court.

Snapdeal finds no merit in Dua’s petition

According to home-grown etailer Snapdeal, Gaurav Dua’s allegations are unsubstantiated and malicious.  

The marketplace’s spokesperson said,

“The allegations made in the revised petition filed by Mr. Gaurav Dua are absolutely baseless and devoid of any merit. A previous complaint filed by Mr. Dua in this regard has been dismissed by the competent court and was found to be baseless and without any merit…The revised petition is an abuse of the process of law and has been filed with malicious intent to harm the reputation of the named individuals. The company intends to take all legal remedies against Mr. Dua in this regard.”

Snapdeal is on a rejection spree or a lying spree? The etailer rejected sellers’ claims about unpaid dues. Also, would this cheating case affect Snapdeal’s due diligence report, which is underway as Flipkart prepares to acquire the Bahl-led company? Is this another fraud like AskMe in the making?

Flipkart-Snapdeal merger: Term-sheet signed; Azim Premji seek answers about sale

The much-awaited merger between Flipkart and Snapdeal was getting delayed due to investors. But Flipkart has taken a major step towards initiation of the Snapdeal acquisition deal. The ecommerce leader has signed the non-binding term-sheet for the acquisition on Tuesday, 23rd May.

This term-sheet lists down the details of the unofficial offer that Flipkart had made earlier this month. The due diligence to determine Snapdeal’s commercial potential is also underway.

A source close to the development disclosed,

“Once the due diligence started, signing the non-binding term-sheet was nothing more than a formality. It was, however, signed on Tuesday and Flipkart is in the process of looking at the financials of the company.”

Few of the details of the deal are:

• Flipkart has valued Snapdeal at $1 billion
• Final price would be decided after Snapdeal’s due diligence report comes out, which would take 6-8 weeks
• Early investors Nexus Venture could get $80 million and Kalaari Capital $70-80 million
• Co-founders Kunal Bahl and Rohit Bansal could get around $60 million

Azim Premji looking for answers about the Snapdeal sale

Wipro’s Chariman, Azim Premji has written to Snapdeal’s board seeking answers regarding the sale to Flipkart. Wipro’s investment arm is one of the minor stakeholders in Snapdeal. According to reports, Premji and other minority stakeholders are not happy with the merger development. This is primarily because Snapdeal’s largest investor Softbank might not compensate these stakeholders.  

“Minority investors like Premji Invest (which holds around 2% in the company) have been reportedly unhappy as Softbank led the merger talks. Kalaari Capital and Nexus Venture Partners, among the largest investors in the e-tailer with 8% and 10% ownership, respectively, have struck a settlement with SoftBank to sell their shares, while the smaller shareholders are unlikely to get compensated by the Japanese group which is orchestrating the sale of Snapdeal to Flipkart,” as per a source.

It looks like that Snapdeal co-founders Bansal & Bahl and Softbank are only concerned about their investment and compensation. Apart from the minority stakeholders, Snapdeal has no interest in paying its vendors as well in spite of agreeing to listen to their complaints.  Snapdeal recently declared that they don’t owe any money to its sellers. But several vendorshave come out in open to talk about their pending dues. Now we wonder, if Snapdeal employees would get paid or not? Or would the co-founders and main investors run away with their millions?

BigBasket exceeds 5mn customer benchmark; Can Amazon & Flipkart take its glory away?

BigBasket is finally experiencing a stroke of good fortune after its industry’s poor performance last year. The online grocery company received funding worth Rs.45 crore back in April and now there happen to be rumours that the etailer may merge with its rival Grofers soon. The merger is expected funding goals are not reached. So, the etailer just might have its funds sorted.

Apart from this, the online grocer managed a mega feat this month by crossing the 5 million customer benchmark. To celebrate this big achievement the etailer is offering special prices to customers on a selection of 20,000 products. Offers will last till the weekend.

BigBasket sales & growth

BigBasket processes more than 50,000 orders every day from the 26 cities it is present in. Customers’ monthly purchases have grown from spends of Rs.500-800 to Rs.2,000 and more over the recent 5 years that the company has been in business.

The etailer’s co-founder, Vipul Parekh said, “We currently operate at 99.5 percent fill rate and 99 percent on-time delivery. With our guaranteed order fill rate and no-questions-asked return policy, we are happy to say that BigBasket has become a preferred choice for e-shoppers.”

When it comes to sales the e-grocery firm has seen more than 300 percent growth over the course of the past year. On a monthly basis, growth is continuous at a 10 percent rate.

There are mainly three kinds of purchases serviced by BigBasket. These include –

• Large monthly bulk grocery purchases
• Quick deliveries of items like milk and bread
• Speciality products sourced from local stores or special brands

Path of difficulties ahead

BigBasket might be celebrating now but once Amazon and Flipkart are fully settled in this ecommerce segment, can the former expect the same level of growth and customer preference?

Amazon recently got the green light for its food retail business and Flipkart confirmed that it will be re-entering the online grocery segment soon. US-based etailer Amazon already has grocery services like Amazon Now and Amazon Pantry to offer express deliveries for grocery items. The etailer also has the capacity to meet bulk needs of restaurants and small kitchens. It has committed $515 million towards its food business for a period of 5 years. Amazon is already investing big in its grocery businesses and has partnered with local supermarkets to speed up deliveries.

BigBasket so far has $291 million in the kitty. But, this is quite minuscule when compared to Amazon’s $5 billion commitment towards its ecommerce activities in India and Flipkart’s recently acquired funding of $1.4 billion.

At the same time, we cannot forget that BigBasket has been in online grocery fairly longer and concentrates solely on this online retail sector. The company has displayed extraordinary growth figures so far. Private labels contribute to 35 percent of its sales today and are likely to contribute to 40 percent by year-end.

So, does it have a chance at keeping its title of Indian online grocery king?